LITIGATION:

Oil pollution plaintiffs lose out as int'l arbitrator rules

An international arbitration panel has ordered the government of Ecuador not to allow the immediate enforcement of a potential ruling against Chevron Corp. in long-running oil pollution litigation there.

The move comes in large part in response to a temporary restraining order earlier this week entered by U.S. District Judge Lewis Kaplan of the Southern District of New York.

Kaplan ordered that, due to allegations made by Chevron that the entire case is an extortion scheme, the plaintiffs should be prevented from seeking to immediately collect damages (Greenwire, Feb. 9).

A judge in Ecuador is due to issue a ruling in the underlying case imminently.

The plaintiffs are seeking up to $113 billion in damages for alleged pollution in the Lago Agrio area of Ecuador.

On Wednesday, the arbitration panel, part of the Permanent Court of Arbitration based in The Hague in the Netherlands, issued a four-page order, made available by Chevron, in which the arbitrators stated that Ecuador should "take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment."

Chevron has been aggressively seeking to shut off avenues for the plaintiffs to collect damages internationally after it learned that plaintiffs had hired Washington-based law firm Patton Boggs to help them. Chevron has no assets in Ecuador.

"Chevron is pleased that the international arbitration tribunal has taken action to prevent the harm against Chevron threatened by the unlawful actions of the Lago Agrio plaintiffs' lawyers," Chevron spokesman Kent Robertson said.

The Lago Agrio plaintiffs are not part of the arbitration proceeding.

Spokeswoman Karen Hinton said the plaintiffs' lawyers still believe that the litigation in Ecuador will "lead to a final judgment that will command international respect and will finally provide a remedy to the thousands of indigenous people and farmers who have suffered for decades because of contamination created by Chevron."

The arbitration between Chevron and Ecuador has been ongoing since 2009 after the oil company alleged that Ecuador had violated bilateral trade agreements between Ecuador and the United States.

Texaco Petroleum Co., which Chevron acquired in 2001, was part of an oil consortium that worked alongside the Ecuadorean government-controlled company, Petroecuador.

Chevron maintains that Ecuador is bound by the contracts Texaco entered into with the government before Chevron was ever involved.

That includes an agreement that Chevron says absolves it from any liability.

The plaintiffs dispute that conclusion, saying the agreement only released Texaco from claims made by the Ecuadorean government and not private parties.

Click here to read the order.

Want to read more stories like this?

E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.

Click here to start a free trial to E&E -- the best way to track policy and markets.